Indian rupee up slightly to 23.83 against dirham - UAE NRIs keep cashing in

Dubai: The Indian rupee strengthened against the dirham for a second consecutive day, to 23.81-23.83 from 23.87 even as fresh uncertainty creeps into whether India can soon strike a trade deal with the US.

For Indian expats in the UAE, these are still highly favourable exchange rates. After last weekend’s rush to remit, recent days have seen continued high volumes of dirham to rupee remittances.

“The last 3 days have all seen the rupee stick to 23.8 levels against the dirham,” said a senior official with a currency exchange business. “Almost every Indian expat who had funds to spare have made good use of it.”

On Wednesday, the rupee had slipped to 23.9 levels after President Trump announced he would hit India with a further 25% secondary tariffs for buying oil from Russia. At that point, it was touch and go whether the Indian currency could fall to a new low of 24 against dirham.  

But in the last 48 hours, the rupee has largely held its ground at 23.8 – “There are indications the Reserve Bank of India has intervened in the currency market,” said Neelesh Gopalan, Treasury manager at a Dubai-based remittance platform. “This is why the rupee is not cracking under the tariff pressure.”

When the rupee comes under pressure, what the RBI typically does is sell some of its sizable dollar reserves in the open market to keep the rupee exchange levels in check. This seems to be what the central bank has done this week too.

So, the first 25% of new US tariffs on India is already in effect and the second one - because of India buying Russian oil - will take effect in another 20 days.

India has already spoken about there being 'no compromise' if it means hurting the country's interests.

While Trump has ruled out any further negotiations with India on a trade deal, there still remains some room to come with some sort of understanding, according to Indian business sources.

Apple now sends a significant volume of iPhones assembled at its base in India to the US. Currently, all such exports are exempt from the 25% tariffs.

"If the tariffs on India continue, would the US continue to exempt all US companies with bases in India?," questions one Mumbai-based analyst. "Will they do the same to Apple with the additional 25% that's coming into effect?

"So, this effectively means only domestic Indian companies with US exports are being penalised. This doesn't seem right."